At the United Nations’ annual climate conference in Dubai last year, the world’s countries have a long-awaited fund for global climate recovery. This so-called loss and damage fund, which is supposed to compensate developing countries for the inevitable damage caused by climate change, received more than $650 million in promises during the conference. It is priced as a historical commitment to climate justice.
The fund’s strongest advocates – small island nations, African countries and climate justice activists – intended it to help the poor nations hardest hit by climate change pay for the many billions of dollars in damage their negligible carbon emissions are causing. have. . They argued that early-industrializing rich countries, which have historically emitted the largest share of carbon emissions, have a moral imperative to support developing countries dealing with the effects of climate change.
But in the nearly 10 months since the UN conference, the fund has not raised much more than the initial $650 million pledge, except for an $11.7 million pledge from Austria and a $7 million announcement from South Korea . Other rich nations have remained largely silent on the subject of additional donations to the fund. And now that the spotlight is on other high-profile climate finance issues at COP29the upcoming UN climate conference in Baku, Azerbaijan, loss and damage advocates are beginning to conclude that additional pledges to the fund are unlikely for now.
“Many of us were hoping that more countries would have come in,” said Liane Schalatek, the associate director of the Washington, DC, office of the Heinrich Böll Foundationan independent organization affiliated with the German Green Party. “Many of the developed countries are taking a sort of wait-and-see approach.”
The total of nearly $680 million pledged to the loss and damage is a tiny fraction of what is needed to cover the costs incurred by the developing world from climate change it largely did not cause: Researchers have estimated climate- induced loss and damage will cost as much as $580 billion per year by 2030.
However, the fact that loss and damage pledges have dried up since COP28 does not mean that progress in getting money to countries in need has come to a complete halt. Representatives from both developed and developing countries agreed on some controversial decisions needed to make the fund a reality: the nomination of board members to oversee the fund, the selection of the World Bank as the fund’s institutional homeand the selection of the Philippines as the fund’s host country, which is required to the council the legal capacity to work with the World Bank. Most recently, the board hired Ibrahima Cheikh DiongA Senegalese and American citizen with experience in public and private banks, as the executive director of the fund.
“Process-wise, it’s quite an accomplishment,” Schalatek said. “The board actually could [to fulfill its duties] and it was quite dubious to be honest.”
Still, several key questions remain open, including the size of the fund and how it will raise additional resources. The loss and damage fund is just one of a handful environmental funds offered by the World Bankand each has a different process for raising capital. The Global Environment Facilitywhich funds a range of environmental projects tackling biodiversity loss, pollution and climate change replenished every four years. During the replenishment cycle, the World Bank actively solicits fundraising, urging donors to pledge funds. However, other climate funds offered by the World Bank have no replenishment schedule. In those cases, fund managers continuously raise funds in annual cycles in an attempt to secure resources for the following year.
The vague wording of the loss and damage agreement appears to split the difference between these approaches: In the decision finalizing the loss and damage fund, UN member countries agreed that the fund “will have a periodic top-up every four years and will retain the flexibility to receive financial input on an ongoing basis.” While this appears to offer maximum fundraising flexibility, it can also give donor countries cover to sit on the sidelines for years at a time – especially since no agreement has been reached on the total dollar amount required by the loss and damage fund, and that all pledges is voluntary.
Schalatek is particularly disappointed that rich countries such as the United States and Japan – which initially pledged just $17.5 million and $10 million respectively – have not announced additional pledges given the size of their economies and relative responsibility for causing climate change. given their high per capita carbon emissions.
“$680 million doesn’t last that long,” Schalatek said.
At COP29 next month, countries will debate an overarching climate finance goal that will include not only loss and damage payments, but also adaptation funding and financing for the energy transition. Degassing the world will require almost unfathomable amounts of money, and rich countries are again expected to pony up funds to help developing countries make the switch to cleaner energy sources. Developed countries have so far largely resist including financial goals for loss and damage in discussions about what this total dollar figure — known as the New Collective Quantified Goal — should be.
Despite these open questions, the loss and damage fund will still start handing out money next year. Schalatek said the board does not need to wait to have all of its operational procedures in place before starting to disburse funds. For example, the fund is already able to provide direct support to the national budgets of countries that need it, instead of trying to channel the funds to specific communities or organizations, which would likely require more bureaucratic procedures to be agreed.
